Employer Services

Challenge Pierce Leahy Corp. is one of the largest international providers of records management and related services--and it's still growing. Acquired companies not only bring growth but numerous additions and adjustments to payroll. So paying new employees accurately and on-time is a high priority for Pierce Leahy's management.

Solution ADP associates developed a tailored plan to efficiently manage the payroll conversion process for each of Pierce Leahy's acquisitions. The model provided a list of action items-"deliverables"--required by both ADP and the client. By closely following the plan and monitoring each task, the conversions of four new acquisitions to the ADP system went smoothly. Nobody missed a beat--or a paycheck.

ADP's oldest and largest business is Employer Services (ES), which contributes more than half of ADP's revenues. ES provides a comprehensive range of payroll, human resource, benefits administration, time and attendance, and tax filing and reporting services to about 400,000 employers in the U.S., Canada, and Europe.

"We at Pierce Leahy take pride in making the staffs of acquired companies feel that they're part of the team right away. ADP helps us achieve that objective by completing each payroll conversion in an efficient, cost effective and timely manner."

This year, ES revenue increased 19% to over $2.2 billion. Today ADP processes the paychecks of over 21 million employees in North America and 2 million in Europe. In '97, we also printed 35 million W-2 forms at our 40 computer centers in the U.S.

As market trends increasingly favor both outsourcing and software as preferred payroll solutions, ES is uniquely positioned to be the logical vendor of choice for more and more companies. ADP's "Payroll AnyWay" strategy presents to businesses of virtually every size and type an extensive menu of outsourced and on-site payroll solutions, from turnkey service to client-site software. In addition, we have segmented employers by size and complexity to effectively match their needs to products and service teams that will best meet expectations.

In North America, ES focuses on three market segments: National Accounts (for companies with 1,000 or more employees), Major Accounts (100 to 999 employees), and Emerging Business Services (for companies with fewer than 100 employees).

Many of the world's largest corporations are ADP National Accounts clients. In many cases, we provide system solutions for their entire human resource, payroll and benefits needs. For those companies who choose to process these applications in-house, we deliver valuable stand-alone services such as tax filing, check printing and distribution, year-end statements (W-2s), and benefits administration. This year, National Accounts revenue grew rapidly and average client tenure is over a decade, and rising.

Major Accounts offers a robust line of best-of-breed payroll and human resource solutions for medium-size companies with full database and functional integration between payroll and human resources (HR). Nearly 65% of the medium-size firms in the U.S., who have elected to outsource their payrolls, are ADP Major Accounts clients.

Emerging Business Services processes payroll for 300,000 clients--far more than any other small business payroll provider. Over 10 million small and emerging companies are in the domestic marketplace, and represent a $12 billion market opportunity for ES.

The ADP Tax Center, which supports all three market segments, electronically interfaces with 2,000 tax agencies from the IRS to local school districts.

Last year the Tax Center processed 13 million federal and state employer payroll tax returns, and transmitted over $200 billion in taxes to appropriate tax collection agencies.

Below: Following their successful payroll conversions, Pierce Leahy's Director of Human Resources, Lawrence J. Sparacino (left), and Payroll Supervisor, Regina A. Walsh, take ADP Senior Implementation Consultant, Hugh McGovern on a tour of one of their archives. The company has 161 storage facilities in the U.S. and Canada. The Electronic Services Division (ESD) also complements our market segments with a product mix that augments our payroll and HR services--from 401(k) to time and attendance tracking. Additionally, we offer Peachtree software business applications and Business Express bill payment services for small clients.

We anticipate sustained growth at buoyant levels in ESD because these additional applications are high value-added and its products are in high-growth markets.

From time to time, we supplement our internal growth through selective acquisitions. This strategy allows us to expand existing products and services or pursue entirely new opportunities by shortening the time to market.

We became the largest provider of payroll services to Canadian businesses with our purchases of and alliances with Royal Bank of Canada's and the Scotiabank's payroll businesses. In July, we also acquired a Brazilian computing services company, giving us a strong initial position in the growing South American employer services marketplace.

Additionally, we made three important moves to accelerate our penetration of the multi-billion dollar benefits administration market. First, we acquired Health Benefits America (HBA), a provider of health care benefits administration services. Then we formed a strategic alliance in benefits administration with William M. Mercer, Inc., one of the leading benefits consulting firms in the U.S.

We also acquired Staff Management Services of Florida, Inc., which we renamed TotalSource. This acquisition firmly establishes ADP as a leading professional employer organization (PEO), and positions us to aggressively increase our presence in the rapidly-expanding employee leasing business.

The continued increase in multinational companies clearly makes payroll and human resource management services a global opportunity. This development and a strong demand for outsourcing make Europe a particularly attractive marketplace for ADP.

Left: ADP's "payroll by phone" is a fast and easy solution for Image Force, a Paris-based advertising agency. Receptionist Nazanine Amini-Majdi (right), phones her ADP client representative to sbmit employee hours and wage information as Gilles Vetillart, Account Director, confirms the data. ES already has 35,000 payroll and HR clients in Belgium, France, Germany, Italy, the Netherlands, Spain, Switzerland and the United Kingdom. Our client retention rate in Europe is especially high, averaging over 90%.

Our core strength in Europe currently is with larger companies--those with 1,000 or more employees.

Our aim is to rapidly expand ES' business in major European countries and be the leading provider of employer solutions in all market segments. We strengthened our product offerings to smaller companies by introducing new "payroll by phone" offerings in France.

Above: The Application Group's Practice Area Manager, Martia DeLauro (far left); and Susan Gallagher, Engagement Manager, ADP; discuss the successful implementation of ADP's full-featured HR management system, CSS Hrizon, with Catherine E. Scism, Business Leader; and Stephen Capuccio, HRIS Manager Human Resources of Blue Cross Blue Shield of Massachusetts.